Consolidate Bills with a Home Equity Line of Credit and Get Your Monthly Payments Under Control

At one point or another, many people find themselves in a situation in which their debt is becoming unmanageable. When this happens, you want options that will allow you to consolidate bills while lowering your overall monthly payments. Using a home equity loan or line is a great way to consolidate bills.

There are many advantages to using a home equity loan or line to consolidate all your bills. For one thing, it has tax advantages just like your first mortgage. Most people are able to deduct the interest that they pay on their taxes. This makes using a home equity product to consolidate bills a wise choice. The debts that you are looking to combine, such as car payments, credit cards, and personal loans, have no such benefits.

When looking to use a home equity product to consolidate bills, it is important to choose the one that fits you the best. As we said before, there are two types of home equity products that can help you consolidate bills, a home equity loan and a home equity line. Both have equal tax advantages and can be used to consolidate bills.

A home equity loan works much like traditional mortgage loan. You will usually have a fixed rate and payment. When you choose a home equity loan to consolidate bills, you will also have a set term in which the loan will be paid off. This is good because you know exactly how much time is involved and when the loan will be gone.

A home equity line of credit can also be a good choice to help you consolidate bills. These loans work much like a credit card with added tax benefits and lower rates. Your rate is usually variable, and your payment is based on a percentage of your outstanding balance. These are good if you want to have more money available to you after you consolidate bills, but don't want the entire sum upfront. As you pay down the line, more money is available to you, similar to a credit card. You will have a draw period in which you can use the money as well as pay it back. Then you will have a repayment period in which you can only pay and not draw. These are a bit more complicated than a straight loan, so if you use this option to consolidate bills make sure you understand all the terms.

Using a home equity product to consolidate bills is a wise choice. Not only will this afford you a lower rate, it will also give you tax benefits. When you consolidate bills into one lower payment, consider using the equity in your home for a great deal.